For many moderate income investors, the costs associated with investing in individual stocks or other securities are prohibitive given the fact that such securities can generally only be purchased in whole numbers and the fact that a commission must be paid for each purchase. For the investor who wishes to purchase relatively small dollar amounts of securities such as $100-$200 at a time, many securities may be too expensive to even purchase a single unit. In addition, even when using a discount broker, the relative size of the commission versus the amount to be invested can make the transaction unappealing.
As a result, new types of investment plans are being offered that are generally referred to as “dollar-based” investments. With these types of plans, an investor can purchase a specific dollar amount of a security by aggregating their purchase order with other investors who also wish to buy the same security. The money summed in the aggregated order is used to purchase a certain number of securities and the ownership of the securities is then divided in accordance with the percentage of money that each individual investor contributes. In many cases, each investor will be allocated some fractional portion of a security purchased. One example of such a dollar based investment system is disclosed in PCT application No. PCT/US99/05010 by Steven Wallman and assigned to Folio Trade LLC of Great Falls, Va., which is herein incorporated by reference. While the system disclosed in the Wallman PCT application allows users to invest smaller sums of money in individual stocks that are included in a portfolio, the system has not achieved widespread acceptance among consumers. This may be due to the complexity of the system and the overhead required to run it. Therefore, there is a need for a dollar-based investment system that is relatively easy and financially viable to operate both from a customer's and from a broker's perspective. In addition there is a need for an investment system that removes most barriers that typically prevent smaller investors from participating in the stock market.
Another problem faced in the financial community is the ability of smaller financial institutions to retain customers in the face of an ever-increasing array of services offered by larger financial institutions. Many customers desire to maintain a level of service associated with smaller financial institutions but still have access to financial products that may be too expensive for the smaller financial institutions to offer. Therefore, there is a need for a system that can allow financial institutions as well as other types of businesses or organizations to offer more sophisticated services in a cost-effective and in a way that does not seem alien to their loyal customers.